September 26, 2019

Cost of TV Advertising

Read more about Business

Is television advertising worth the cost? When done correctly, TV can be an effective way to showcase your product. Read on for more information and some common mistakes to avoid.

© CreditDonkey

There are numerous factors that affect the cost of running a TV ad

  • Time of year
  • Market size
  • Viewership
  • Cable vs. broadcast
  • And more.

We cover everything you need to get started.

What Does TV ADVERTISING Cost?

Television ads are priced on a cost per thousand (CPM) basis. That's the price for your ad to be seen by 1,000 people.

The CPM varies, especially depending on the city you live in and several other factors. (More on this below.)

For a 30-second ad, plan on spending:

  • Between $200 and $1,500 on a local TV station
  • Around $120,000 on national TV

A half-hour TV show has four commercial breaks. That's sixteen, 30-second commercials split between national and local advertising.

Estimates by Market
The market in which you like play an important role in the cost of running a television ad.

The smaller the market, the cheaper it will be. The larger the market, the more expensive the ad slots.

The largest markets in the U.S. are:

  1. New York
  2. Los Angeles
  3. Chicago
  4. Philadelphia
  5. Dallas-Fort Worth

The estimated CPM for Los Angeles is $35. In smaller markets, like Kansas City or Detroit, it may be closer to $20. Read on to learn more.

Other Factors

The price of your advertisement will also depend on:

Demographics
Ages 25 to 54 is the most desirable group because they spend the most money. But targeting them will cost more.

Gender
As an advertiser, you'll need to decide which gender to target. Some shows lean more towards one or the other.

Network/TV Show
Running an ad during a popular TV show, like Big Bang Theory or This Is Us, will cost more.

Broadcast versus Cable
The cost of running ads on these platforms differs dramatically. (We cover this below.)

Live Viewership
Airing ads during live TV events like football games will cost more money since the time slot is more desirable. More people are likely to see your ad because they cannot fast forward through commercials.

Time of Day
Evening time slots will be more expensive since more viewers watch the nightly news and primetime shows.

Time of Year
Back-to-school, holidays and other seasonal dates are in high demand and drive up prices.

Advertising during the start of the year can be cheaper. Businesses spend big during the holidays and often cut back in the first few months of the year as they recover. With less demand comes opportunity.

National or Local Events
Ad space around these events, like elections, the Olympics or banner sports, tend to be more expensive.

Strength of Your Market
If your business is located in a market with high demand, expect to pay more.

Know the Vocabulary ¬
  • Cost per Thousand (CPM): Television ads are priced on a cost per thousand (CPM) basis. That's the price for your ad to be seen by 1,000 people.

  • Demographic: A demographic is the statistical data about a certain group of people.

  • Broadcast TV: Broadcast TV refers to stations aired over public airwaves. In most cities, they are affiliates like WABC, New York's ABC station. They may also be owned and operated by the network, like NBC 4 Los Angeles.

  • Cable TV: Cable stations are stations that cost extra on a monthly basis, like MTV or CNN.

HOW TO CALCULATE THE COST OF RUNNING A TV AD

The most important factor will be the CPM, or cost per minute. The CPM will fluctuate depending on how desirable the audience is for advertisers.

Start by answering these two questions:

  1. How many people watch the show you want your ads to appear on?

  2. What's the average CPM for that type of TV program?

You can call your local station for data. If they don't provide the information, you can do a rough estimate yourself.

The station will give you viewership. Divide the cost for one ad spot by the total viewership.

To calculate the rough cost of running your ad:
Price = number of spots x number of viewers in the thousands x average CPM for the program.

TV ADVERTISING ON A STRICT BUDGET

The cost of TV advertising is high. Learn how to lower the price tag by considering the following:

Time of Year
Pick a time of the year in low demand, like Q1 or Q2. Sometimes, networks will offer a lower price during this time of year to fill timeslots.

Fire Sales
In rare instances, TV networks will let you purchase ad packages in advance for a discount.

Remnant Advertising
Snag a cheap ad spot when networks are struggling to fill certain time slots. But be ready with your budget—the opportunities are time-sensitive.

Auctions
Ad space will go to the highest bidder during an auction. The catch: no control over time slots and payment will be required upfront.

Packages and Media Mixes
Securing multiple weeks of ad space upfront helps networks and TV stations fill available slots. Buying a package often means discounts and may include other perks.

THE PROS AND CONS OF ADVERTISING ON TV

Advertising on television can be a costly medium. Weigh the pros and the cons before placing your ad.

Pros

  • Efficiency
    Studies have found that TV can yield the best return on spending.

  • The Blend of Sight and Sound
    If your product or business is visual, TV is the perfect medium to showcase that.

  • Attentive Viewers
    When your ads run—especially during live TV events—viewers will watch.

  • Large Audience
    The best part about advertising on TV is the number of viewers who can potentially see your ad.

Cons

  • The Ability to Make Changes
    Creating a TV ad can cost a lot of money—you may only be able to produce one. With print or online ads, changes can be made quickly and often.

  • Targeting Your Audience
    Finding a specific audience can be tricky with TV ads. You may be able to target general age groups or genders, but online advertising is much more precise.

  • Fast Forwarding
    Many viewers have the ability to skip ads.

  • Cost
    Small business owners may not be able to afford running TV ad spots or promos due to the price.

ADVERTISING ON TV: WHEN, WHERE, HOW

© CreditDonkey

How you advertise on TV will depend on your goals.

  • Do you want new customers?
  • Are you offering a new service?
  • Do you have a clear message?

Picking a Station Based on Audience

To figure out which station to run your ads, examine each station's audience demographics.

Your local TV stations will be able to give you this information. Consider surveying your customers, too, to determine what shows you watch.

Here are some of the average audience ages for national TV stations:

NetworkAverage Viewer Age
CBS61 years old
NBC59 years old
ABC59 years old
FOX37 years old

Of course, demographic information will vary with local stations and shows. Most TV stations tend to have older audiences. If you do not want to target an older audience, consider other mediums.

To target a younger audience, try running ads on streaming platforms like Amazon, HBO Go, or similar platforms.

Broadcast vs. Cable Ads

When you want to run an ad on TV, you'll have to pick broadcast or cable. Those terms are somewhat antiquated now.

So what's the actual difference?

Broadcast TV
Refers to stations aired over public airwaves. In most cities, they are affiliates like WABC, New York's ABC station. They may also be owned and operated by the network, like NBC 4 Los Angeles.

Cable stations
Are channels that cost extra on a monthly basis, like MTV or CNN.

You will reach a very different audience with cable or broadcast stations. Here's why:

  • More people have broadcast TV. The potential audience is greater.

  • Broadcast shows tend to have a wider audience. Cable shows, on the other hand, have niche audiences.

HOW TO CREATE YOUR OWN TV AD

Many small business owners worry about finding the balance between professional-looking ads and the right budget. There are a few ways to create your ad:

Do It Yourself
Experienced creators can build their own TV ad. You will need:

  • Professional video and audio equipment
  • Actors
  • Production and post-production staff

Work with a Local Broadcast or Cable Company
Small businesses may want to go this route. Your local station will have a production team and staff to help build a commercial for a fee.

There may even be packages for building the ad and the cost of ad times.

Work with a Media Agency
Certain companies can help you build your commercial and help you buy ad time. If you take the route, ask for a sample of their work in advance.

What makes a good TV ad?
Your TV ad does not have to be elaborate or fancy to have an impact. A good TV ad needs to clearly state your business name and the products you offer, at its core. Once your ad has the basics, then you can think of clever ways to convey the information.

Keys to a Successful Ad
Your commercials will need to have several crucial elements:

  • Who
    Tell your audience who you are—the name of your business needs to be highlighted.

  • Reason to Visit
    The audience needs a reason to come to your business, whether it's a sale or new offering. This gives your ad purpose.

  • Further Information
    Give the audience a way to find out more. Your website URL is the most effective method.

    Unfortunately, simply putting up your business' physical address will be hard to remember, unless you have heavy foot traffic.

If you don't have a small business website, check out our guide right here. (LINK TO MY PREVIOUS STORY)

WHEN TO ADVERTISE

Picking a time to advertise can make a big difference in the success of your ad. Some spots will be more expensive than others.

The most desirable time to advertise is during primetime. Primetime is from 5 p.m. to 10 p.m., Monday to Friday.

But you don't need to advertise in primetime to be successful. Consider your audience and when they will be watching TV.

When is the most expensive time to run a TV ad?
Usually around 6 p.m. to 7 p.m. in primetime, when most viewers are tuned in. Expect to pay double—or more!—nationally. Even locally, this time slot is pricey.

You have two options:

  • Specific Show
    Airing your ad during a specific show, like Wheel of Fortune or Jeopardy.

  • Wider Rotation
    Airing your ad during a wider rotation (for example: 5 p.m. to 10 p.m.).

If you find a station with a demographic like the one you're targeting, it may be best to pick a wider rotation—a longer chunk of time—to avoid paying so much.

However, if you know a certain show has your exact target demographic, it may be worth shelling out more money to have your ad air during that specific show.

For example, if you sell furniture, it may be worth paying extra to have your ad air during certain HGTV shows.

Running ads at odd hours, like the very late night, may be cheap—but your audience may not actually be watching. You may be spending more to reach an inconsistent audience.

How Often to Run YOUR AD

Run your ads multiple times to get the full effect of TV advertising. In fact, broadcasting your ad multiple times in the space of one show directly correlates to viewers reacting to your ad, research shows.

A regular 22-minute TV program contains roughly eight minutes of commercials. That's around six minutes for national advertising spots and two minutes for local, though it varies per station.

Refuse to pay the full rate when advertising during reruns. Audiences will usually be smaller.

A 60-second ad will cost twice as much as a 30-second ad. Ads that are15 seconds will cost about 60% to 70% less than a 30-second ad.

A mix of 30- and 15-second ads will serve you best on a budget. The 30-second ad will get your message across. A 15-second ad will come later as a reminder.

Consider a 10-second promo spot as well. These are just like regular commercials, but less expensive. They play in clusters during a commercial break within program time. The downside to a 10-second spot: they air during syndicated programming.

How to Maximizing Your Ad Value

There are a few ways to maximize your money for TV advertising. Follow these easy tips:

  • Focus on one time of day
  • Run at least 3 or 4 ads during that time
  • Mix 15- and 30-second commercials to save money

There's a reason to run multiple short ads over the course of a show. Viewers will get the impression you're a major advertiser. Multiple ads will also increase your impressions.

If this technique yields results, consider expanding out your efforts to other shows or other time periods.

Performance-Based Media Placement
These are not regular TV ads. With performance-based media placement, you only pay when someone takes action after seeing your ad. Consider this option if you want to receive something, like calls or filled out online forms.

This option works well for advertisers looking for a low-risk option. However, some stations do not offer this option.

Product Placement Advertising
Some businesses will pay you to put their products in your TV program or ad.

For example, a great option may be placing your product in a show like The Price Is Right, a game show that organically features products.

The benefit to using product placement is that people will not fast forward through the show like they would fast forward through a commercial.

The downside of using product placement is that people do not have context or a contact number, unlike a traditional commercial. Unless you're a big business, viewers may not know how to buy your product.

HOW TO BUY TV AD SPOTS

There are two ways to buy TV advertising time slots.

  1. Directly from a local broadcast station or cable provider

  2. Use a media agency to purchase your spots on your behalf

Not sure what your local TV station is? You can find an index here. You can find your local cable providers here.

However, there are differences between how media is sold at broadcast stations and at cable providers. It has to do with how they measure their audiences.

Broadcast TV
Broadcast television is sold by designated market areas, also known as DMAs. Broadcast TV sells commercials for specific shows at specific times.

Cable TV
Cable TV is sold by zone, or cluster of towns. This allows you to target a geographic area more specifically.

However, cable companies sell ads in "rotator" spots. You may not know exactly when your ad will air side from "primetime between 5 to 10 p.m."

Which option should you pick?
That depends on your goals and target audience.

  • With a Small Budget
    Fewer people will see your ads. But the people who do see your ads will be in the geographic area you want to target. Cable ads will also be more affordable, leaving you more money to spend on multiple ads.

  • With a Larger Budget
    Try broadcast ads. The added expense means time during popular primetime shows with your target audience.

If all that seems intimidating, consider using an agency to place your ads.

USING A MEDIA AGENCY TO PLACE YOUR TV AD

A third party like a media agency can help you place your ads. These companies handle a variety of factors surrounding TV advertising, from conceptualizing and creating the ad to buying media placements.

Another benefit? Media agencies have established relationships with local stations. Using an agency would be particularly helpful for buying national ad slots for this reason. They may be able to get you a better price on TV ads.

Typically, the agencies will get a commission from the TV station and not from you.

Shop around for a media agency that fits your needs and budget. Make sure the agency has experience in your field.

HOW TO MEASURE the SUCCESS of Your Ad

There are several ways to measure success in advance.

Use a Vanity URL
This is a unique URL that redirects to your main website.

For example: using CD.com as a vanity URL that redirects to CreditDonkey.com.

This way, you can track how many people use the URL. Purchase and create one through your website provider.

Call Tracking Number
Phone numbers are most important for some businesses. Most numbers on TV ads have 800 numbers.

You can create your own 800 number right here.

Ask New Customers
Quiz your customers during a certain time period about how they heard about your business. When you learn where your new business is coming from, you can figure out what methods work best.

Measure Sales
Make sure to track sales in the time period around your campaign to see if your TV ad worked.

Using just one of these ideas may not give you a clear idea of your success. A combination of all methods may work best to determine whether your TV ad worked.

This way, you can tweak your techniques in the future.

Be careful about measuring the success of your TV ad during other promotions. It will be difficult to determine how customers are finding you.

Similarly, certain times of year may contribute to an uptick in sales, like Christmas time or summertime.

Other TYPES OF ADS

The cost for running ads across various media platforms differs. Here are some alternatives to consider:

Local Radio
Advertising on local radio can cost $500 to over $5,000 per week, depending on multiple factors.

A radio spot during driving time (peak hours) can cost 30 times less than a TV ad on a primetime network. Running ads online can be even cheaper.

Local and Regional Newspaper
Newspaper ads can cost anywhere from a couple hundred dollars to tens of thousands of dollars for a quarter page ad.

Google Ads
Online targeting is much more specific than traditional mediums. You can start with $1 to $2 per click.

Facebook Ads
Like Google Ads, Facebook ads can be much more specific. You set the budget—likely around $0.50 per click.

Running ads on the radio or online can be less expensive as a trial and error option. Figure out what works best for your business and fine-tune your strategy over time.

Consider a cost analysis before running ads on any platform. On a small business budget, running ads on alternative platforms can be more cost-effective.

THE BOTTOM LINE

The cost of television advertising will vary based on when and how you advertise as well as the audience you are trying to reach.

Keep running statistics to determine the success of your TV ads. Over time, you will learn where your audience is and the best ways to reach them.

Write to Samantha Tatro at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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